SAN FRANCISCO (MarketWatch) -- American
International Group Inc. is expected to pay more than $1 billion to
settle civil-fraud investigations by state and federal authorities,
according to a media report Friday.

The tentative terms would represent one of the steepest monetary
penalties ever paid by a financial company, The Wall Street Journal
reported in its online edition, citing unnamed people familiar with
the matter. See
Wall Street Journal story (subscription required)

The deal, which would also include the Securities and Exchange
Commission, is likely to be reached with AIG
in two to three weeks, The Journal said.

The settlement would end a suit filed in May by the New York
attorney general's office and the New York State Insurance
Department, alleging that the giant insurer and its former chief
executive used improper accounting maneuvers in recent years to
polish results, misleading investors and state regulators in the
process, according to The Journal. The SEC hasn't filed suit but is
investigating the giant insurer.

Not included in the settlement is Maurice R. "Hank" Greenberg,
AIG's former chief executive, who also is named as a defendant in
the May lawsuit, according to the report. Greenberg is fighting the
lawsuit in court.

AIG is the world's largest publicly traded seller of
property-casualty insurance and the largest life insurer in the
U.S., as measured by premiums. It does business in more than 100
countries, The Journal said.

A spokesman for the company said AIG continues to cooperate with
all regulators. The Journal said, while spokesmen for the SEC and
the New York State Insurance Department declined to comment.